“Leaving a legacy” can mean many different things. A legacy can be your reputation. People often refer to the legacy a president will leave. A president’s legacy would be something he has done for which he will be remembered. We will all leave legacies like this and hopefully we have made choices in our lives that our legacy as our reputation will be a good one.
A legacy in estate planning usually refers to something we leave behind for our children or our community. A legacy can be a playground built in our community, or a scholarship or a gift to a charitable organization. Some believe only the very wealthy can afford to establish scholarships or other types of legacies but many people can afford to leave something of value which will continue to provide for others into the future. For example, a woman who loves flowers and city gardens asked in her last will and testament that money be set aside from her estate to build a park bench in the garden she visited most often. The park bench cost $500 but her contribution to the park will be there for every person who wants to sit and enjoy the gardens that brought her so much joy.
Scholarship funds can be established while a person is living or after a person has passed away. An individual should not think he needs to make an initial investment which would fund many years of a scholarship because a scholarship fund can start out small. A scholarship fund begins with an initial investment but if that investment is managed wisely, it can continue to grow and continue to provide more and more scholarships in the future.
Gifts to Nonprofits
Nonprofit organizations have many needs for investment and most are happy to satisfy specific requests for donations. A man who was passionate about animals wanted to his local humane society to build an outdoor area for dogs to run and enjoy the outdoors rather than remain locked up in a kennel while awaiting adoption. He left a fund established for the creation of an outdoor play area. When the man died, the fund was not large enough to cover the costs of the play area, so the trustee of the fund continued to manage the account after he died and six years later, the fund had enough value to cover the costs and the play area was created in his honor.
You can leave assets to your family and friends and still leave a legacy to your community or your school even if you are not leaving millions. For people who do have millions, establishing a trust for scholarships or for nonprofit organizations can be a very smart tax-saving strategy which also provides for many worthy causes. An experienced estate planning attorney can help you create a comprehensive estate plan which honors your passions and helps the organizations or people to continue to do the work you support.
Every year you can deduct contributions if they are made to or for the use of a qualified recipient. Only gifts to qualified organizations can be deducted though and determining who those organizations are is not always obvious. Some gifts to organizations who are nonprofit organizations are not eligible for you to claim a deduction. There are many private foundations who might appear to be public charities, but according to the law are not. Gifts to foreign governments, foreign charities and some local organizations are not allowed under the IRS rules.
You can find out whether an organization is a qualified charity for tax purposes by looking at many sites online, including your state’s attorney office who keeps records on businesses. You can also contact the organization directly and ask them if they can provide you with their nonprofit status. Of course you can give to any organization you choose, whether or not it is a charity. The designation of charity status only comes into play if you want to use the donation as a tax-saving strategy.
No matter what estate planning or probate concerns you have, we have the resources and tools to help. Contact us today at (832)510-2900 to schedule a consultation with our firm.